We can acton climate change - And lower electricity costs
Published April 4, 2019
by Howard Lee, former state Utility Commissioner and NC SPIN panelist, April 3, 2019.
As Democratic presidential hopefuls announce their candidacies, it’s clear that climate change will continue to make headlines. But a story that isn’t receiving much ink is how a law designed to accelerate production of clean energy here at home is preventing consumers from accessing cheaper renewable resources.
The Public Utility Regulatory Policies Act of 1978 (PURPA) was enacted under President Jimmy Carter to drive up domestic production of energy, especially from cogeneration facilities and renewable energy resources.
A lot has changed since PURPA became law. There’s been significant growth in the amount of clean energy now powering the U.S. electricity grid. We’ve also seen dramatic decreasesin the cost of renewable resources because of technological advancements and changing market dynamics. The International Renewable Energy Agency (IRENA)’s 2017 reportfound the price of solar PV modules fell by almost three-quarters between 2010-2017, and wind turbine prices dropped by half over the same period.
Ironically, ratepayers often don’t benefit from declining costs of clean energy becauseof PURPA.
Why is this? PURPA contracts can be long term, locking in prices for up to 20 years, even though costs have continued to fall over the last few years. As a result, the rates for electricity governed by PURPA are much more expensive than is otherwise available on the market, burdening electricity customers with higher bills. The lengths of these contracts prevent utilities from taking advantage of lower technology costs. Consumers shouldn’t be forced to pay higher prices for clean energy because of an outdated, 40-year-old law.
Sadly, this isn’t the only way that PURPA saddles customers with unnecessary expenses. The law also has mandatory purchase obligations that force electric companies to buy energy—even when they don’t need it. Utilities are required to purchase power from a set of approved energy producers called “qualifying facilities,” or QFs. These QFs must be small and have a primary energy source that is renewable, according to criteria set by PURPA.
These criteria were developed back in 1978 to ensure that new renewable producers wouldn’t be disadvantaged in the electricity market, particularly by large oil producers that controlled a significant share of the market at that time. But now the criteria are being used by certain clean-energy producers againstotherclean-energy producers to gouge consumers, selling electricity at rates three or four times the price of other renewable energy sources otherwise available on the market.
Another unintended consequence has been the interpretation of the “one-mile rule,” which is used to determine whether multiple facilities of a single power producer are part of the same site for obtaining QF status under PURPA. Bad actors have been violating the spirit of the law by separating QFs just beyond a mile of each other, thereby forcing utilities to purchase power from each site, even if no one needs it.
It’s unlikely the law’s drafters wanted to force taxpayers to purchase more expensive power when cheaper, domestically produced renewable resources were also available. And given the energy landscape at that time, it would have been almost impossible for them to predict the uptick in clean energy production and how quickly costs have decreased.
But that doesn’t mean we should settle with the status quo. The Federal Energy Regulatory Commission (FERC) is in charge of implementing PURPA and can take meaningful action to correct these abuses.
FERC held a technical conference on this law almost three years ago and has the power and information to enact comprehensive PURPA reform now. Absent FERC intervention, we will continue to leave consumers vulnerable to higher prices and states virtually powerless to address any distortions in the market. As we advance a clean-energy agenda that addresses climate change, we must advance commonsense, comprehensive reform of PURPA by FERC, so Americans can purchase the cleanest energy at the lowest possible price.
Howard N Lee is a former commissioner with the North Carolina Utilities Commission, former Secretary of Natural Resources and former NC Senator.
April 4, 2019 at 11:44 am
Richard Taylor says:
Fix the Howard Lee headline to take the apace out of "acton" to read "act on." Also in the attribution tagline at the end of the piece, add something to the effect of "Howard Lee is a former mayor of Chapel Hill."
April 7, 2019 at 1:48 pm
Norm Kelly says:
Democrats once again rule Raleigh. It's time they start doing to every law what they choose to do with immigration law.
Liberals choose to ignore immigration laws cuz they believe it benefits them at the ballot box. Purely selfish. Well, so is cheaper/more cost effective energy. If PURPA is holding us back, screwing the consumer as it were, then it's time liberals start acting like liberals, and being consistent. I know expecting most politicians to be consistent is one thing. Expecting liberal/socialist pols to be consistent is expecting the impossible.
Libs, it's time to take action. Stop enforcing PURPA when it hurts 'the people'. Prove that you are 'for the children' once & for all. You've made your bed when it comes to killing babies, you've made your bed when it comes to illegal immigrants & sanctuaries, now it's time to make a bed when it comes to working for the people. I mean actually working for the people instead of just talking about it.
Lib leaders in NC need to ignore PURPA when it's the right thing to do. PURPA preventing renewable inexpensive energy production? Skip it. Tell the Feds to kiss off on PURPA, just like you do on sanctuaries, illegals, and other ideas/programs/laws that you dislike.
If we had libs ruling our state that actually had backbone, actually cared about people's lives, instead of just their own careers, we'd have libs implementing PURPA only when it benefits the people.
Why do we still have Certificates of Need? Why do we still have state-owned, state-run ABC stores? Cuz it provides power to politicians. Not politicians that care about 'the people' or 'the children', but pols that care about their power and their future.
Let's start a revolution in NC. Let's have our 'leaders' do the right thing FOR US and have them disregard PURPA to the benefit of the people! Unfortunately, lib pols may not care about the effects & costs of PURPA because there's no tax benefit in it for them. If they could find a way to raise taxes by ignoring PURPA, libs would be all over it! But since PURPA isn't connected to taxes, libs don't care! Let them raise taxes on an issue, lib pols are all in. Otherwise, don't count on them!